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January 23, 2021

Transform the DRAM production line, and use image sensors

According to Korean media pulsenews, South Korea’s Samsung Electronics is accelerating its entry into the image sensor business, which will become a very important business in the era of self-driving mobility.

According to a source in the electronics industry on Tuesday, Samsung Electronics has begun to revamp its DRAM 11 line in Hwaseong, Gyeonggi, and began production of CMOS image sensors (CIS).

It is predicted that by 2030, with the introduction of autonomous vehicles, the automotive image sensor market will grow to more than 20 trillion won (18.2 billion US dollars).

Market participants expect that Samsung Electronics aims to gain a larger market share in the global image sensor market by providing image sensors for vehicles.

According to global consulting firm KPMG (KPMG), the global image sensor market will reach US$143 billion in 2030 and US$47 billion in 2020. As automotive image sensors currently account for 14% of the total image sensor market, by 2030, the automotive image sensor market may exceed 22 trillion won.

Compared with other image sensors, the use of image sensors for vehicles that are installed on cars to achieve autonomous driving requires more accurate and reliable performance to ensure the safety of passengers. They also need to meet stringent conditions in terms of user environment and service life.

Market trackers counterpoint research that the introduction of autonomous technology in the automotive market will require cars to install various types of sensors to improve driving safety. It points out the importance of camera sensors in advanced driver assistance systems (ADAS).

In 2018, Samsung Electronics launched the ISOCELL Auto brand of automotive image sensors, using its leading smartphone image sensor technology, hoping to make a big difference in the automotive image sensor market. An industry official who asked not to be named stated that Samsung Electronics needs large-scale investment and a pre-emptive strategy to gain an upper hand over global companies such as Sony in the image sensor market.

However, it remains to be seen whether the investment can be executed due to invalid leadership after the Samsung Group's heir and its vice chairman, Jay Y. Lee, were sentenced to prison.

Samsung and Sony compete for image sensor supremacy

Sony has a global share of 50% in the field of smartphone image sensors. As the risks of China’s Huawei technology surface, Sony’s base camp is approaching South Korea’s Samsung Electronics. Sony prioritized the supply of large-scale mobile phone manufacturers such as Huawei, which imposed export restrictions in the United States, and misjudged it. With the battle for smart phones supporting the high-speed communication standard 5G, the battle for the dominance of sensors has intensified.

The person in charge of a company involved in the equipment required for the image sensor production process said, "Sony is cautious, but Samsung believes that'now is an opportunity' and is launching an investment offensive. The actions of the two companies are completely different." This equipment company received multiple large-scale orders for image sensor equipment from August to September, all from Samsung.

"The plan has failed," Sony executives said in response to the sanctions imposed on Huawei by the US Department of Commerce on September 15. Sony’s image sensor demand has been so strong that production cannot keep up. The company has actively invested in increasing production, including announcing a new plant in Nagasaki Prefecture.

However, due to US export restrictions, Sony stopped supplying sensors to Huawei. It is reported that Huawei is Sony’s second largest customer after Apple, accounting for approximately 20% of Sony’s image sensor revenue of approximately 1 trillion yen. Sony has been approved to restart the transaction with Huawei, but it is not clear whether the transaction volume can return to its original level.

Statistics from the British survey company Omdia show that Sony’s image sensor (CMOS, complementary metal oxide semiconductor) share in 2019 was 53.5% in terms of monetary value, which is a big gap with the second-place Samsung (18.1%). Sony took the lead in developing high-performance image sensors called "layered", mainly involved in high-priced products. Sony's technical strength is considered to be higher than that of Samsung. Apple and Huawei pursue higher camera functions and always choose image sensors produced by Sony.
The Huawei issue may change this pattern of power.

Samsung started late in the field of image sensors and has fewer deals with Apple and Huawei. On the other hand, Samsung has been expanding the low-ranking mobile phone manufacturers such as Xiaomi and vivo. At present, Xiaomi and others are betting on Huawei's replacement demand to increase production of smart phones. The situation that has not been selected by large manufacturers before is likely to bring benefits to Samsung.

Sony, which is facing its rivals, will also expedite the expansion of deals outside of large manufacturers. Sony Vice President Yuki Yuki emphasized at a press conference in August that "will be committed to expanding and diversifying customers." However, Yasuo Nakane, a senior analyst at Mizuho Securities, pointed out that “it is difficult to fully offset the decline in sales to Huawei by expanding sales to other companies this fiscal year.

The selling point of Sony's sensor is its comprehensive strength such as fast reading and low noise. On the other hand, Samsung has developed a 108-megapixel image sensor for its own and Xiaomi smartphones, etc., to find a way out through high pixels. Tetsuo Omori, a senior analyst at Japanese research firm Techno Systems Research, said, "Sony's sensors may not meet the needs of manufacturers pursuing high-resolution pixels."
Samsung's biggest advantage is that the company is a comprehensive semiconductor manufacturer, with full involvement from memory to foundry. From the perspective of the semiconductor business, compared to Sony, which can be said to be dedicated to image sensors, Samsung has a semiconductor business with revenue up to 10 times the scale, and it also applies the most cutting-edge manufacturing technology to image sensors. In the procurement of manufacturing equipment and materials, the advantage of scale can also be exerted. Samsung also produces electronic components within the group, honing the overall performance of camera modules including sensors.
Samsung also independently produces high-definition OLED panels, the main components of smartphones, and launches products at a wide range of prices through the "Galaxy" brand. It is the number one smartphone manufacturer in the world in 2019. Samsung has advantages such as self-adjusting the supply and demand of sensors, and making it easy to use with smart phones.
The operating profit of Sony's image sensor business for fiscal year 2019 (ending March 2020) is approximately 240 billion yen, which is basically the same as the game business and is one of the main sources of revenue. However, when it released its April-June 2020 financial report in August, Sony announced its expectation that the operating profit of image sensors in fiscal year 2020 would fall to 130 billion yen. This is equivalent to a year-on-year decrease of 45%, which is more prominent than the company’s overall 27% decline in operating profit. This is considered to take into account the reduction in global demand for smartphones and Huawei’s export restrictions, and some analysts believe that it will further decline.

Regarding the main components of smartphones, large domestic electronics companies have made huge investments in LCD panel production, but they have failed in the investment competition with Chinese and Korean companies and lost their competitiveness. On the other hand, Sony’s image sensor depicts a strategy of maintaining competitiveness through active investment with high technological strength and market share as a weapon.
Samsung has proposed a goal that the image sensor field will surpass Sony and become the world's first by 2030. Due to the slowdown of Huawei's growth due to US export controls, the power map of smart phone manufacturers will usher in a fundamental change, and at the same time there will be attacks and defenses related to image sensors. Depending on the development of the situation, Sony may also fall into a vicious circle of "cannot find stable demand, become prudent in investment, and lose competitiveness." The previous Sony base camp collapsed.

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